Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/24225
Authors: 
Czarnitzki, Dirk
Kraft, Kornelius
Year of Publication: 
2006
Series/Report no.: 
ZEW Discussion Papers 06-33
Abstract: 
We estimate the effects of R&D on firms' credit ratings and on financial distress. The main purpose is the comparison of firms in Western Germany and Eastern Germany as a transitional economy. Innovative activity has a positive impact on firm value proxied by ratings in Western Germany, but a negative impact in Eastern Germany. We also consider future financial distress, and find that R&D in Eastern German firms leads to higher default risk, in contrast to Western Germany. There, R&D enhances future performance. This result is highly politically relevant, since the high level of subsidies present in Eastern Germany may be subject to misallocation.
Subjects: 
Transitional Economy
Credit Rating
Bankruptcy
Innovation
Policy
JEL: 
P27
O31
L33
O12
O38
Document Type: 
Working Paper

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